Category Archives: Government Procurement

Recently, the LTO formulated the Motor Vehicle License Plate Standardization Program (MVPSP) to supply the new license plates for both old and new vehicle registrants. The DOTC published in newspapers of general circulation the Invitation To Bid for the supply and delivery of motor vehicle license plates for the MVPSP and stated that the source of funding in the amount of P3,851,600,100.00 would be the General Appropriations Act (GAA). However, a perusal of R.A. No. 10352 or the General Appropriations Act of 2013 (GAA 2013), would show that Congress appropriated only the amount of P187,293,000.00 under the specific heading of Motor Vehicle Plate-Making Project. The DOTC proceeded with the bidding process, but delayed in the implementation of the project. The Senate Committee on Public Services conducted an inquiry in aid of legislation on the reported delays in the release of motor vehicle license plates, stickers and tags by the LTO.

Petitioner, by counsel and assisted by Retired Justice Leonardo A. Quisumbing, instituted this taxpayer suit, averring that he was a diligent citizen paying his correct taxes to the Philippine Government regularly; that he was a registered vehicle owner, as evidenced by the Certificate of Registration of his motor vehicle and a registered licensed driver; that he would be affected by the government issuance of vehicle plates thru its MVPSP upon his renewal of the registration of his vehicle; that not being a participant to the bidding process, he could not avail of the administrative remedies and procedure provided under Republic Act (R.A.) No. 9184 or the Government Procurement Reform Act, and its Implementing Rules and Regulations (IRR); that as far as he was concerned, there was no appeal or any plain or speedy remedy available to him.

For the respondents, the OSG stated that the issues presented had been rendered moot and academic as the gap in the budget of MVPSP was already bridged and covered by the full and specific funding by GAA 2014 in the amount of P4,843,753,000.00 for the item “Motor Vehicle Registration and Driver’s Licensing Regulatory Services.” With the signing of MVPSP on February 21, 2014, after the enactment of GAA 2014, the OSG claimed that all objections that petitioner might have, whether right or wrong, had been rendered naught.

On the other hand, JKG-Power Plates averred that petitioner had no locus standi. It pointed out that petitioner had admitted that he was not one of the bidders in MVPSP and so he would not suffer any direct injury. Likewise, the present case was not a proper subject of taxpayer suit because no taxes would be spent for this project. The money to be paid for the plates would not come from taxes, but from payments of vehicle owners, who would pay P450.00 for every pair of motor vehicle license plate, and P120.00 for every motorcycle license plate. Out of the P450.00, the cost of the motor vehicle plate would only be P380.00. In effect, the government would even earn P70.00 from every pair of plate.

ISSUES:

Whether the petition should be dismissed for being moot and academic, considering the assailed deficiencies in appropriation have been substantially complied with.

Whether the petitioner has locus standi to bring his case in court.

Whether the petitioner established a taxpayer’s suit.

HELD:

1. NO.

The rule is well-settled that for a court to exercise its power of adjudication, there must be an actual case or controversy – one which involves a conflict of legal rights, an assertion of opposite legal claims susceptible of judicial resolution. The case must not be moot or academic or based on extra-legal or other similar considerations not cognizable by a court of justice. Where the issue has become moot and academic, there is no justiciable controversy, and an adjudication thereon would be of no practical u se or value as courts do not sit to adjudicate mere academic questions to satisfy scholarly interest, however intellectually challenging. xxx Nevertheless, there were occasions in the past when the Court passed upon issues although supervening events had rendered those petitions moot and academic. After all, the moot and academic principle is not a magical formula that can automatically dissuade the courts from resolving a case. Courts will decide cases, otherwise moot and academic, if: first, there is a grave violation of the Constitution; second, the exceptional character of the situation and the paramount public interest is involved; third, when the constitutional issue raised requires formulation .of controlling principles to guide the bench, the bar, and the public; and fourth, the case is capable of repetition yet evading review.

In the case at bench, the issues presented must still be passed upon because paramount public interest is involved and the case is capable of repetition yet evading review. MVPSP is a nationwide project which affects new and old registrants of motor vehicles and it involves P3,851,600,100.00 of the taxpayers’ money. Also, the act complained of is capable of repetition because the procurement process under R.A. No. 9184 is regularly made by various government agencies. Hence, it is but prudent for the Court to rule on the substantial merits of the case.

2. YES.

Locus standi is defined as the right of appearance in a court of justice on a given question. The fundamental question is whether a party alleges such personal stake in the outcome of the controversy as to assure that concrete adverseness which sharpens the presentation of issues upon which the court depends for illumination of difficult constitutional questions.

In the present case, petitioner justifies his locus standi by claiming that the petition raises issues of transcendental importance and that he institutes the same as a taxpayer’s suit. It must be noted that the Court has provided the following instructive guides to determine whether a matter is of transcendental importance, namely: “(1) the character of the funds or other assets involved in the case; (2) the presence of a clear case of disregard of a constitutional or statutory prohibition by the public respondent agency or instrumentality of the government; and (3) the lack of any other party with a more direct and specific interest in the questions being raised.”

Petitioner sufficiently showed that his case presents a matter of transcendental importance based on the above-cited determinants. He elucidated that, first, around P3.851 billion in public funds stood to be illegally disbursed; second, the IRR of R.A. No. 9184 and R.A. No. 7718 were violated and the contract for MVPSP was awarded to respondent JKG Power Plates despite the utter disregard of the said laws; third, there was no other party with a more direct and specific interest who had raised the issues therein; and fourth, MVPSP had a wide range of impact because all registered motor vehicles owners would be affected.

3. YES.

A person suing as a taxpayer must show that the act complained of directly involves the illegal disbursement of public funds derived from taxation. Contrary to the assertion of JKG-Power Plates, MVPSP clearly involves the expenditure of public funds. While the motor vehicle registrants will pay for the license plates, the bid documents and contract for MVPSP indicate that the government shall bear the burden of paying for the project. Every portion of the national treasury, when appropriated by Congress, must be properly allocated and disbursed. Necessarily, an allegation that public funds in the amount of P3.851 billion shall be used in a project that has undergone an improper procurement process cannot be easily brushed off by the Court.

The Government Procurement Policy Board (GPPB) prescribed a form of Contract Agreement which procuring entities shall follow. But what if the procuring entity drafts and executes a contract not following the prescribed form? What are the implications of such deviations?

It is contrary to law[1]which requires procuring entities to follow a prescribed form;

It is contrary to public policy,[2]as the contract agreement cannot be simplified without disparaging deviations from the strict requirement of applicable laws, rules and regulations;

Requirements of Government Procurement Reform Act

Standardization of procurement process and forms[3] are necessary to systematize, avoid confusion and ensure transparency of the public procurement. For this purpose:

“[T]he GPPB shall pursue the development of generic procurement manuals and standard bidding forms, the use of which once issued shall be mandatory upon all Procuring Entities.[4](emphasis supplied)

The standard bidding forms are more commonly known as “bidding documents”. Section 17 of the law enumerates the form and contents of Bidding Documents:[5]

The Bidding Documents shall be prepared by the Procuring Entity following the standard forms and manuals prescribed by the GPPB. The Bidding Documents shall include the following:

xxx

(j) Form of Contract, and General and Special Conditions of Contract.

xxx(emphasis supplied)

The GPPB already released the standard Philippine Bidding Documents[6] (PBDs) that shall serve as the template for procuring entities to prepare their own bidding documents, adopting the appropriate provisions pertinent to their agency and deleting those not applicable to them. The latest was the Fourth Edition, as harmonized with Development Partners,[7] approved on 17 December 2010.[8]

Included in the PBDs are prescribed forms among others Omnibus Sworn Statement,[9] Bid Form[10] and Contract Agreement.[11]

Authority of the GPPB to Prescribe Forms and Manuals

The cited authorities above[12] gave us the clear mandate of GPPB. The GPPB was created to establish, formulate, and amend when necessary, the Implementing Rules and Regulations.[13] The powers, duties and responsibilities under the former Procurement Policy Board were also absorbed by the GPPB.[14]

It is also by these statutory powers the GPPB issues resolutions and guidelines, including such forms and manuals. Once issued, they shall be mandatory upon all procuring entities.[15]

Ordinary Contract vs. Government Contract

A contract refers to the meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service.[16] The general rule under the Civil Code is that contracts are obligatory regardless of the form, subject to certain exceptions.

Article 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the requisites for their validity are present. However, when the law requires that a contract be in some form in order to be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. In such cases, the right of the parties stated in the following article cannot be exercised.

Article 1357.If the law requires a document or other special form, as in the acts and contracts enumerated in the following article, the contracting parties may compel each other to observe that form, once the contract has been perfected. This right may be exercised simultaneously with the action upon the contract.

(emphases supplied)

Government contracts on the other hand, particularly those arising from or as a result of public procurement is a special contract which is primarily governed by special laws. The case of Capalla v. COMELEC[17] taught us that parties to a government contract are not at full liberty to amend or modify the provisions of the contract bidded upon.Award of public contracts through public bidding is a matter of public policy.[18] Provisions of applicable laws, especially provisions relating to matters affected with public policy, are deemed written into such government contract which is imbued with public interest.[19] Under procurement related contracts, the rights and obligations of the parties are governed not only by the Civil Code but also by R.A. No. 9184, among others.

Effects of Introducing a Different Form of Contract

There are at least two schools of thought:

The first would treat such government contracts as VOID for being executed against the mandatory law[20] particularly R.A. No. 9184.

The second would consider such contracts valid but irregular or illegal.

We fear the first.

As already discussed, the “Contract Agreement” form in the PBD is theGPPB PRESCRIBED format and not a mere sample form. The GPPB, being the policy making body of the government on procurement matters, cannot be disregarded. R.A. 9184 passes upon GPPB the authority to prescribe forms and guidelines necessary for effective implementation of the law.

In introducing another form, we might be omitting essential provisions in relation to existing laws, rules and regulations already consolidated by the GPPB. In Agan, Jr. v. Philippine International Air Terminals Co., Inc., (PIATCO):[21]

[T]his Court declared as null and void, for being contrary to public policy, the Concession Agreement entered into by the government with PIATCO, because it contained provisions that substantially departed from the Draft Concession Agreement included in the bid documents. The Court considered the subject contracts a mockery of the bidding process, because they were substantially amended after their award to the successful bidderon terms more beneficial to PIATCO and prejudicial to public interest.

(emphases supplied)

In considering the second school of thought, we may disregard our fears and continue with a valid contract. The remedy provided by law is to compel each other to observe that form, considering the contract may already have been perfected.

However, we cannot prevent the Commission on Audit (COA) in issuing observations and findings particularly in not complying with the prevailing laws, rules and regulations related to disbursement of public funds following its constitutional mandate and in accordance with the Auditing Code of the Philippines (P.D. No. 1445). Depending upon the appreciation of the Resident COA Auditor, such violation of R.A. No. 9184 may result to an Audit Observation Memorandum (AOM), a Notice of Suspension (NS), or worst, Notice of Disallowance (ND). This is also without prejudice to any administrative liability for “conduct prejudicial to the best interest of service” under Civil Service laws and rules.

Recommendations

It is recommended that the use of any other form other than that prescribed by the GPPB be abandoned, the former being: (a) contrary to law; and (b) contrary to public policy.

It is also recommended that the contracts already perfected and reduced to the form other than that prescribed by R.A. No. 9184 through the GPPB be executed in the prescribed form as discussed in this advisory.

#

[1] Republic Act No. 9184, An Act Providing for the Modernization, Standardization, and Regulation of the Procurement Activities of the Government and for Other Purposes”

If you are a supplier, contractor or consultant bidding with the government through any of its branches, agencies or instrumentalities, have you come across a requirement of submitting your eligibility documents in advance, and then being issued a “Certificate of Registration” that you can use in lieu of those documents? If yes, then you need to read this article.

The practice of procuring entities, through their Bids and Awards Committee (BAC), in using the “Certificate of Registration” in lieu of the Class “A” eligibility documents has no more basis in law (since beginning of year 2013).

The Revised Implementing Rules and Regulations (IRR) of R.A. No. 9184 once provided for an option to the procuring entities to devise and adopt a registry, whether manual or electronic, to facilitate eligibility check during bid opening. However, such provision of the IRR no longer exists since its amendment in2012. Hence, such practice is in violation of prevailing procurement rules and regulations, and fees collected therein are considered unnecessary and illegal.

The IRR, before it was amended, contained the following provisions:

8.5.2. Eligibility requirements may be sent electronically to a procuring entity through the PhilGEPS: Provided, however, That the prospective bidder concerned shall submit a certification to the BAC at least seven (7) calendar days before the deadline for the submission and opening of the technical and financial envelopes that the documents submitted are authentic copies of the original, complete, and all statements and information provided therein are true and correct: Provided, further, That the PhilGEPS shall allow manual submission of eligibility requirements. The PhilGEPS shall generate and send an acknowledgement of any eligibility requirement received by it.

xxx

23.4. To facilitate determination of eligibility, the BAC of a procuring entity may maintain a registry system using the PhilGEPS or its own manual or electronic system that allows submission and/or recording/entry of eligibility requirements simultaneously with registration.

23.4.1. The registry system shall contain the foregoing Class “A” documents which should be maintained current and updated by the bidder concerned at least once a year or more frequently when needed.

23.4.2. A bidder who maintains a current and updated file of his Class “A” Documents shall be issued a certification by the BAC to that effect, which certification may be submitted to the procuring entity concerned in lieu of the foregoing Class “A” documents.

23.4.3. If the procuring entity maintains a registry system using the PhilGEPS or its own electronic system, a prospective bidder, whether or not duly registered in either system, shall submit a written letter of intent and/or its application for eligibility and latest Class “A” documents, to the BAC on or before the deadline specified in the Bidding Documents. Any application for eligibility or updates submitted after the deadline for the submission of the letter of intent shall not be considered for the bidding at hand.

xxx

24.4.3. To facilitate determination of eligibility, the BAC of a procuring entity may maintain a registry system using the PhilGEPS or its own manual or electronic system that allows submission and/or recording/entry of eligibility requirements simultaneously with registration.

24.4.3.1. The registry system shall contain the foregoing Class “A” documents which should be maintained current and updated by the bidder concerned at least once a year or more frequently when needed.

24.4.3.2. A bidder who maintains a current and updated file of his Class “A” Documents shall be issued a certification by the BAC to that effect, which certification may be submitted to the procuring entity concerned in lieu of the foregoing Class “A” documents.

24.4.3.3. If the procuring entity maintains a registry system using the PhilGEPS or its own electronic system, a prospective bidder, whether or not duly registered in either system, shall submit a written letter of intent and/or its application for eligibility and latest Class “A” documents, to the BAC on or before the deadline specified in the Bidding Documents which shall in no case be later than the date for the submission and receipt of bids. Any application for eligibility or updates submitted after the deadline for the submission of the letter of intent shall not be considered for the bidding at hand

(underscoring supplied)

However, since the issuance of GPPB Resolution No. 12-2012 dated 01 June 2012, “Approving the Guidelines for the Use of the Government of the Philippines-Official Merchants Registry (GOP-OMR) and the Proposed Amendments to the Implementing Rules and Regulations of Republic Act No. 9184”, such provisions were effectively amended to read as follows:

Section 8.5.2. Eligibility requirements may be sent electronically or manually to the PhilGEPS. When a manufacturer, supplier, distributor, contractor, or consultant registers with PhilGEPS, it shall submit along with the requirements a certification stating that the documents submitted are complete and authentic copies of the original, and all statements and information provided therein are true and correct. Upon confirmation, validation, and verification of the documents submitted, PhilGEPS may issue, in favor of the registered entity, a Certificate of Registration and Membership that contains the certification mentioned in the preceding sentence.

xxx

Section 23.4. To facilitate determination of eligibility, the BAC of a procuring entity may use the contents of the PhilGEPS electronic registry of manufacturers, suppliers, distributors, contractors, and/or consultants.

23.4.1. The PhilGEPS registry system shall contain the foregoing Class “A” documents, which should be maintained current and updated by the bidder concerned at least once a year or more frequently as may be necessary.

23.4.2. A bidder who maintains a current and updated file of his Class “A” Documents may submit to the procuring entity, in lieu of the said documents, the Certificate of Registration and Membership issued by PhilGEPS pursuant to Section 8.5.2.

xxx

Section 24.4.3. To facilitate determination of eligibility, the BAC of a procuring entity may use the contents of the PhilGEPS electronic registry of manufacturers, suppliers, distributors, contractors, and/or consultants.

24.4.3.1. The PhilGEPS registry system shall contain the foregoing Class “A” documents, which should be maintainedcurrent and updated by the bidder concerned at least once a year or more frequently as may be necessary.

24.4.3.2. A bidder who maintains a current and updated file of his Class “A” Documents may submit to the procuring entity, in lieu of the said documents, the Certificate of Registration and Membership issued by PhilGEPS pursuant to Section 8.5.2.

(underscoring supplied)

It can be inferred from the above that procuring entities are no longer empowered to issue a “Certificate of Registration” in lieu of Class “A” documents.Also, the “Letter of Intent” or LOI was also deemed as unnecessary requirement and inconsistent with the operationalization of the PhilGEPS electronic registry. For this reason, the GPPB issued GPPB Resolution No. 27-2012 dated 23 November 2012, the fallo of which:

NOW, THEREFORE, for and in view of the foregoing, WE, the Members of the GOVERNMENT PROCUREMENT POLICY BOARD, by virtue of the powers vested on US by law and other executive issuances, hereby RESOLVE to confirm, adopt, and approve, as WE hereby confirm, adopt, and approve the following:

DELETE Section 23.4.3 of the revised IRR of RA 9184, and the similar provision under Section 24.4.3.3 of the same IRR, requiring the submission of a written LOI and/or application of eligibility together with the latest Class “A” Documents in case the procuring entity maintains a registry system using the PhilGEPS or its own electronic system.

(underscoring supplied)

The current practice of the BAC requiring or allowing the payment of “Registration Fee” specific to a particular procurement also appears to be excessive and unnecessary, but may also be also illegal.

The next logical question is: What is the effect of the current practice of the BAC to the procurement itself?

The prospective bidders should have been declared DISQUALIFIED if they submitted only the certification in lieu of class “A” documents. The IRR of R.A. No. 9184 is clear that bids shall contain the eligibility requirements as enumerated in Sec. 23.1 thereof:

25.2. The first envelope shall contain the following technical information/documents, at the least:

a) For the procurement of goods:

i) Eligibility requirements under Section 23.1 of this IRR;

xxx

b) For the procurement of infrastructure projects:

i) Eligibility requirements under Section 23.1 of this IRR

xxx

If such eligibility documents are not present in the bid opening, the BAC shall rate the bids as “Failed”:

Section 30. Preliminary Examination of Bids

30.1. The BAC shall open the first bid envelopes of prospective bidders in public to determine each bidder’s compliance with the documents required to be submitted for eligibility and for the technical requirements, as prescribed in this IRR. For this purpose, the BAC shall check the submitted documents of each bidder against a checklist of required documents to ascertain if they are all present, using a non-discretionary “pass/fail” criterion, as stated in the Instructions to Bidders. If a bidder submits the required document, it shall be rated “passed” for that particular requirement. In this regard, bids that fail to include any requirement or are incomplete or patently insufficient shall be considered as “failed”. Otherwise, the BAC shall rate the said first bid envelope as “passed”.(emphasis supplied)

The COR issued by the BAC, having no more legal basis to stand on, cannot be a substitute to the exclusive and absolute enumeration of Sec. 23.1, to wit:

23.1. For purposes of determining the eligibility of bidders using the criteria stated in Section 23.5 of this IRR, only the following documents shall be required by the BAC, using the forms prescribed in the Bidding Documents:

a) Class “A” Documents

Legal Documents

i) Registration certificate from SEC, Department of Trade and Industry (DTI) for sole proprietorship, or CDA for cooperatives, or any proof of such registration as stated in the Bidding Documents.

ii) Mayor’s permit issued by the city or municipality where the principal place of business of the prospective bidder is located.

iii) Tax clearance per Executive Order 398, Series of 2005, as finally reviewed and approved by the BIR.

Technical Documents

iv) Statement of the prospective bidder of all its ongoing government and private contracts, including contracts awarded but not yet started, if any, whether similar or not similar in nature and complexity to the contract to be bid; and

Statement identifying the bidder’s single largest completed contract similar to the contract to be bid, except under conditions provided for in Section 23.5.1.3 of this IRR, within the relevant period as provided in the Bidding Documents in the case of goods.

All of the above statements shall include all information required in the PBDs prescribed by the GPPB.

v) In the case of procurement of infrastructure projects, a valid Philippine Contractors Accreditation Board (PCAB) license and registration for the type and cost of the contract to be bid.

Financial Documents

vi) The prospective bidder’s audited financial statements, showing, among others, the prospective bidder’s total and current assets and liabilities, stamped “received” by the BIR or its duly accredited and authorized institutions, for the preceding calendar year which should not be earlier than two (2) years from the date of bid submission.

Valid joint venture agreement (JVA), in case the joint venture is already in existence. In the absence of a JVA, duly notarized statements from all the potential joint venture partners stating that they will enter into and abide by the provisions of the JVA in the instance that the bid is successful shall be included in the bid. Failure to enter into a joint venture in the event of a contract award shall be ground for the forfeiture of the bid security. Each partner of the joint venture shall submit the legal eligibility documents. The submission of technical and financial eligibility documents by any of the joint venture partners constitutes compliance.

According to Article 5 of the Civil Code of the Philippines, an act executed against the provisions of mandatory or prohibitory laws is VOID. Failure to comply with the mandatory requirement of submitting the eligibility requirements may fall under this case. It may also be a proper subject of DISALLOWANCE by the Commission on Audit.

Since there have been a lot of newly elected officials, particularly on Local Government Units, the Bids and Awards Committee which is tasked to undertake the procurement activities of the agency is usually re-organized at their pleasure. But there are certain points that Local Chief Executives (Governors, Mayors, Punong Barangay) must carefully consider in making the decision.

In designating new set of BAC Members

How many are they?

At least five (5) but not more than seven (7) may be designated. (Section 11.2.1, IRR)

The members of the BAC shall be personnel occupying plantilla positions of the procuring entity concerned. (Section 11.2.3, IRR)

Where will they come from?

The BAC for Local Government Units shall be composed of: (a) One representative each from the regular offices under the Office of the Local Chief Executive such as, but not limited to, the following: Office of the Administrator, Budget Office, Legal Office, Engineering Office, General Services Offices; and (b) A representative from the end user unit. (Section 11.2.3, IRR)

Who designates the Chairman and Vice Chairman?

The members shall elect among themselves who shall act as the Chairman and Vice-Chairman. (supra)

Is there a required ranking for BAC members?

None. However, the Chairman of the BAC shall be at least a third ranking permanent official of the procuring entity. (supra)

Is it possible to have substitute BAC members in case of unavailability?

Yes. The [Local Chief Executive] may designate alternate members to the BAC, who shall have the same qualifications as their principals as set in the [R.A. No. 9184] and [its] IRR. (Section 11.2.4, IRR)

Are alternate BAC members also entitled of honoraria?

The alternate members shall attend meetings of the BAC and receive the corresponding honoraria, whenever their principals are absent.(supra)

Are the terms of alternate BAC members distinct from their principals? How about their accountability?

The alternate members shall have the same term as their principals. The accountability of the principal and the alternate member shall be limited to their respective acts and decisions. (supra)

Can a person designated to approve contracts in behalf of the Local Chief Executive be a member of the BAC?

No. In no case shall the Head of the Procuring Entity and/or the approving authority be the Chairman or a member of the BAC. (Section 11.2.5, IRR)

Is there a fixed term for BAC members?

Yes. Unless sooner removed for a cause, the members of the BAC shall have a fixed term of one (1) year reckoned from the date of appointment, renewable at the discretion of the Head of the Procuring Entity. (Section 11.2.6, IRR)

What happen to the incumbent BAC members after the term of the appointing Local Chief Executive expires?

Remember that BAC members are occupying plantilla positions, and thus permanent in nature. They don’t usually end the terms of their office with the designating authority. Upon expiration of the terms of the current members, they shall continue to exercise their functions until new BAC members are designated. In case of resignation, retirement, separation, transfer, re-assignment, removal, or death, the replacement shall serve only for the unexpired term: Provided, however, That in case of leave or suspension, the replacement shall serve only for the duration of the leave or suspension. (supra)

Can the [Local Chief Executive] suspend or remove an incumbent BAC member?

For justifiable causes, a member shall be suspended or removed by the [Local Chief Executive]. underscoring supplied (supra)

How about the BAC Secretariat?

How many are they?

There is none indicated in R.A. No. 9184 and its IRR. Usually, there should at least be three (3) of them – a head and two members.

Are they qualified? Is there a required ranking?

As to the members, there is none, but the head of the Secretariat shall be at least a third ranking permanent employee (in LGUs) or if not available, a permanent employee of the next lower rank. In addition to [unquestionable] integrity, [Local Chief Executives] shall consider procurement proficiency as a factor in designating the head of the Secretariat and Procurement Unit.

Where will they come from?

The [Local Chief Executive] shall create a Secretariat which will serve as the main support unit of the BAC. An existing organic office within the procuring entity may also be designated to serve as Secretariat. However, to strengthen and promote the professionalization of the organizations’ procuring unit, the Head of the Procuring Entity may create procurement units that may serve concurrently as BAC Secretariat in accordance with the guidelines issued by DBM.

Is the BAC Secretariat also entitled of honoraria?

It depends. The procuring entity may also grant payment of honoraria to the BAC Secretariat [and the TWG] members, subject to the relevant rules of the DBM.

What is the term of the head of BAC Secretariat and its members?

There is none. Unlike the BAC, the Secretariat’s term does not expire in one (1) year. The nature of its function is continuous, so that any attempt to re-organize it as often as with BAC members will later prove to be futile for the procuring entity. Discontinuity is the last thing a procuring entity would like to encounter. It is strongly recommended that BAC Secretariat should be established as an organic office and permanently function as such. Procurement proficiency is not obtained in any 2-3 days seminar workshop. The true test of proficiency is qualified experience and service actually rendered. At some extent, it was suggested that a “proficiency test” be conducted on a regular basis for validation.

May the Chief Accountant or any of its members be allowed to constitute the BAC Secretariat?

Yes, it may be allowed. The law is silent. The prohibition of the Chief Accountant and its staff by the COA and GPPB applies only to membership in the BAC.

What happens to the incumbent BAC Secretariat after the term of the appointing Local Chief Executive expires?

It continues. They don’t usually end the terms of their office with the designating authority. The function of the BAC Secretariat is no less than permanent in nature. Unless removed for a cause, their terms are not bound to limitations as long as they are part of the Procuring Entity.

Can the [Local Chief Executive] suspend or remove an incumbent BAC Secretariat?

Yes. The power to appoint necessarily includes the power to remove. But just like the reasons for removal of BAC members, it must be justifiable.

COMMISSION ON AUDIT represented by its chairman GUILLERMO CARAGUE, petitioner,

vs. LINK WORTH INTERNATIONAL INC., respondent.

[G.R. No. 182559. March 13, 2009]

FACTS:

Petitioner COA conducted bidding for various information and communication technology equipment which include 3 units of document cameras. Not having made the lowest financial bid among the “passing” bidders, Link Worth thought that it had lost the bidding, until the COA-BAC asked Link Worth and Audio Visual for product demonstration of their document camera. Link Worth, later, learned that the COA-BAC disqualified the first 2 lowest bidders for failure to meet the technical specifications. Link Worth told the Technical Working Group (TWG), before whom the project demonstration was conducted, that the equipment offered by Audio Visual failed to satisfy the technical specifications required for the document camera. Link Worth identified the following technical specifications which Audio Visual failed to satisfy:

Bid Specifications

Audio Visual Specifications

Frame Rate

15 frame/second

2-way Filter Control

Power Supply

DC 12V

6V Power Supply

Maximum Weight

1.5 Kg

1.7 Kg.

Respondent insisted that the technical specifications should be strictly complied with. Audio Visual did not dispute that their equipment, the Aver Vision 300 camera, failed to meet the product specifications required. After the product demonstration, the TWG asked Audio Visual to submit a clarification as to the frame rate of the document camera. Thus, Audio Visual submitted a certification, issued by AverMedia Technologies, Inc., that Aver Vision 300, complies with the 15 frames/second specification. AverMedia, Inc. is the manufacturer of the Aver Vision 300, the document camera offered by Audio Visual. In a Memorandum, the TWG recommended that the contract be awarded to Audio Visual for the following reasons: (1) Performance, in terms of capture, projection of images on the screen, digital zoom and pan and 1800 rotation function; (2) Sharper image projection than that of the Lumens DC80A; (3) Ease of Use; (4) Compact and Sturdy; (5) With remote Control; and (6) The 0.27kg. weight excess is immaterial. Respondent filed a Motion for Reconsideration but the COA-BAC proceeded with the award of contract to Audio Visual. Respondent wrote the COA-BAC questioning the said award but was dismissed. Respondent filed a formal protest with COA Chairman but was likewise dismissed.

Pursuant to Section 58 of R.A. No. 9184, otherwise known as the Government Procurement Reform Act, respondent filed a Petition for Certiorari under the 1997 Rules of Civil Procedure, ascribing grave abuse of discretion to the COA “when it denied Petitioner’s protest, which denial effectively sanctioned the disregard of technical specifications by COA-BAC in the subject procurement, and sanctioned the clear violations of the Procurement Law and its IRR-A.” The RTC granted the said petition, nullifying the subject award, and awarding exemplary damages, attorney’s fees, and costs. The Court of Appeals affirmed RTC’s finding that Audio Visual failed to comply with several technical specifications of the document cameras and that COA violated certain provisions of R.A. No. 9184 and its Implementing Rules. However, the appellate court deleted the award of damages to respondent, holding that petitioner cannot be held liable for damages as this would violate the commission’s immunity from suit. Petitioner and Audio Visual were directed to make mutual restitution.

ISSUE:

Whether or not the petitioner violated R.A. No. 9184 and its Implementing Rules.

RULING:

Yes. The decision of Court of Appeals was affirmed. No pronouncement as to costs.

RATIO:

Public bidding as a method of government procurement is governed by the principles of transparency, competitiveness, simplicity and accountability. These principles permeate the provisions of R.A. No. 9184 from the procurement process to the implementation of awarded contracts. It is particularly relevant in this case to distinguish between the steps in the procurement process, such as the declaration of eligibility of prospective bidders, the preliminary examination of bids, the bid evaluation, and the post-qualification stage, which the Bids and Awards Committee (BAC) of all government procuring entities should follow.

In this case, the bidders ranked as the two lowest bidders were disqualified by the BAC presumably at the post-qualification stage when their bids failed to meet the technical specifications for the project. Remarkably, however, despite the fact that there also existed technical variances between the bid specifications and Audio Visual’s document camera, the BAC did not post-disqualify Audio Visual. COA’s Technical Working Group (TWG) declared, during post-qualification, that there is no frame speed variance between Audio Visual’s document camera and the required specification because Audio Visual’s document camera is compliant with the 15 frames/second requirement. It is well to point out that it was initially unclear whether Audio Visual’s document camera met the bid specification requiring a frame rate of 15 frames/second. What Audio Visual indicated was that its document camera, Aver Vision 300, featured a “2-way Filter Control.” However, this feature does not even pertain to the camera’s capture frame rate, or the frequency at which the camera produces unique consecutive images called frames. As its User Manual indicates, the flicker filter refers to how the camera is synchronized with an external projector or display.

Assuming that there is no frame rate variance between Audio Visual’s document camera and that required in the bid specifications, the TWG’s, and the BAC’s, disregard of the fact that Audio Visual’s document camera exceeded the specified weight by 0.27 kg. and used a 6V power supply instead of the required 12V power supply, was still unwarranted and highly irregular. The post-qualification procedure, under which the Lowest Calculated Bid undergoes verification and validation to determine whether all the requirements and conditions specified in the Bidding Documents, have been met, should have effectively weeded out Audio Visual’s bid.

The function of post-qualification is to verify, inspect and test whether the technical specifications of the goods offered comply with the requirements of the contract and the bidding documents. It does not give occasion for the procuring entity to arbitrarily exercise its discretion and brush aside the very requirements it specified as vital components of the goods it bids out. The fact is all too glaring that during the post-qualification stage, the BAC considered some factors which were extraneous to and not included in the bid documents, such as ease of use, compactness and sturdiness, and the remote control of Audio Visual’s document camera, and, at the same time, glossed over two of the requirements which were indicated in the bid documents, i.e., the weight and power supply requirements. Had the prospective bidders known that all of the above factors formed part of the bid specifications, a different set of bids might have emerged. Essentially, it can be said that the eligible bidders did not bid upon the same thing.

It is remarkably ironic that petitioner COA, the constitutional watchdog, signed its imprimatur to a transaction which resulted from an irreparably flawed bidding process. The Commission, in this case, has displayed a lamentable disregard of its mandate as the sentinel of government resources. The nullification of the award of the contract to Audio Visual and the mutual restitution directed by the Court of Appeals are both appropriate consequences. It is, however, paramount that COA be reminded of its most important role, seemingly forgotten in this case, in the promotion of transparency and accountability in public financial transactions.

Petitioners were participating bidders questioning the identity and eligibility of the awarded contractor Mega Pacific Consortium (MPC) where the competing bidder is Mega Pacific eSolutions, Inc. (MPEI) as signed by Mr. Willy Yu of the latter. Private respondent claims that MPEI is the lead partner tied up with other companies like SK C&C, WeSolv, Election.com and ePLDT. Respondent COMELEC obtained copies of Memorandum of Agreements and Teaming Agreements.

ISSUE:

Whether or not there was an existence of a consortium.

RULING:

NO. There was no documentary or other basis for Comelec to conclude that a consortium had actually been formed amongst MPEI, SK C&C and WeSolv, along with Election.com and ePLDT. The president of MPEI signing for allegedly in behalf of MPC without any further proof, did not by itself prove the existence of the consortium. It did not show that MPEI or its president have been duly pre-authorized by the other members of the putative consortium to represent them, to bid on their collective behalf and, more important, to commit them jointly and severally to the bid undertakings. The letter is purely self-serving and uncorroborated.

“Bidders shall submit their bids through their duly authorized representative using the forms specified in the Bidding Documents in two (2) separate sealed bid envelopes, and which shall be submitted simultaneously. The first shall contain the technical component of the bid, including the eligibility requirements under Section 23.1 of this IRR, and the second shall contain the financial component of the bid.”

Project Requirements, which shall include the following: (a) Organizational chart for the contract to be bid; (b) List of contractor’s personnel (viz, Project Manager, Project Engineers, Materials Engineers, and Foremen), to be assigned to the contract to be bid, with their complete qualification and experience data; and (c) List of contractor’s equipment units, which are owned, leased, and/or under purchase agreements, supported by certification of availability of equipment from the equipment lessor/vendor for the duration of the project;

Sworn statement by the prospective bidder or its duly authorized representative in the form prescribed by the GPPB (Omnibus Sworn Statement):

Q: Is there a maximum allowable time to complete a procurement process? In submitting a bid, can some of the eligibility requirements be submitted later?

A: Yes, the allowable time and bid submission restrictions are clear in Sections 25.4 and 25.5 accordingly.

25.4. Bids shall be received by the BAC on the date, time, and place specified in the Invitation to Bid/Request for Expression of Interest. The following periods from the last day of posting of the Invitation to Bid/Request for Expression of Interest up to the submission and receipt of bids shall be observed:

a) For Goods, a maximum period of forty-five (45) calendar days.

b) For infrastructure projects, the following maximum periods:

Approved Budget for the Contract (in Philippine currency)

Period

Fifty (50) million and below

50 calendar days

Above fifty (50) million

65 calendar days

c) For consulting services, a maximum period of seventy five (75) calendar days.

25.5. Bids, including the eligibility requirements under Section 23.1 of this IRR, submitted after the deadline shall not be accepted by the BAC.